BRK vs S&P - Oct 2023 - 15 Year Chart

S&P thumping BRK in 15 year comparison


This is Jim’s fair value vs price chart he posted on the other board today.

Explains your chart above.


No it doesn’t. Chart is saying brk is currently overvalued a bit.


You see the spike in price at the end of 2008, yes?

Spike is in both S&P index and BRK in 2008 followd by a dip. I have been posting BRK underperformance for a few years now, so not a recent phenomenon due to some spike in 2008.

14 years


Never ending excuses from the loyalists.

SPY didn’t spike in late 2008, but whatever.

You have been posting BRK underperformance for a few years now. You used to post 1, 3, 5, 10, 15 and 20 year performance. Now you only do 15 year. Why is that?

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What’s stopping you ?

I’ve mentioned this a few times before. I don’t know how to properly compare Berkshire to an S&P Index fund. That’s because for Berkshire, you can invest and let the whole thing ride for all 15 years straight. But for the S&P500 fund, you receive dividends each year and have to pay taxes on it. VOO distributed around 1.5% in dividends, so about a 1/3 of that can’t be reinvested and instead has to be sent to Uncle Sam. Meanwhile, all of Berkshire dividends are reinvested internally to the company. Over 15 years, removing 0.5% of principal each year and sending it to the US Treasury definitely has some effect on the overall return.

I know many will say “well, what if it’s in an IRA or other tax-deferred account”, and that may be true for some folks. But for the average person that has some tax deferred money and some taxable money to invest, it usually makes more sense to choose the things that will have higher long-term capital gains (or qualified dividends) to be on the taxable side, and the things that have non-qualified income like interest, etc inside the tax-deferred side. That’s because the long-term capital gains (and qualified dividends) tax rate is substantially lower than normal income tax rates (those rates are 0%, 15%, 20%, or 23.8%).

Basically, buying Berkshire in a taxable account gets you the full benefits of tax-deferral, while buying an S&P500 index fund only gets you partial benefits of tax deferral.

And then, for retired folks, with a large nest egg, it can become even worse. If you have a few million in an S&P500 Index fund, when it distributes that 1.5% each year, you are adding a hefty amount to your AGI (and taxable income) which can have other adverse effects (IRMAA, etc). Berkshire does no such thing, and you can decide when income is realized. To your own advantage, of course.

I don’t know of any charting tool that takes these things into account properly.

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IF IRA non taxable account, then this is a non issue

IF in a taxable account

a. you get to use this money now ! It is not waste.

b. taxes are not bad ! this money compounds too. better roads, schools, freedom etc.

d. Your “qualified” dividends may be taxed at 0% if your taxable income falls below $44,625 (if single or Married Filing Separately), $59,750 (if Head of Household), or $89,250 (if (Married Filing Jointly or qualifying widow/widower) (tax year 2023). Above those thresholds, the qualified dividend tax rate is 15%.

e) Worst case: 15% of 1.5% is a small amount

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